Analyze the income-adjustment mechanism

Reference no: EM131900062

Problem

1. In the gold-standard era, there existed the so called rules of the game. What were these rules? Were they followed in practice?

2. Keynesian theory suggests that under a system of fixed exchange rates, the influence of income changes in surplus and deficit nations helps promote balance-of-payments equilibrium. Explain.

3. When analyzing the income-adjustment mechanism, one must account for the foreign repercussion effect. Explain.

Reference no: EM131900062

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